Thursday, May 7, 2009

In a speech Wednesday, House Majority Leader Steny Hoyer (D-MD) argued that Social Security reform should be a priority and said that the process of reaching consensus could begin this fall.

Given the gravity of our situation, we cannot afford to take any options off of the table, either on the spending or the revenue side. Of our entitlement programs, I believe we would have the easiest challenge in reforming Social Security. Here, the options are well and widely understood. We can bring in more revenues. We can restrain the growth of benefits, particularly for higher-income workers, while we strengthen the safety net for lower-income workers. And/or we can raise the retirement age, recognizing that our life expectancy is significantly higher today. What is missing here is not ideas—it is political will. The bipartisan trust we need for compromise has been sorely damaged. And both sides are guilty—Democrats for using Social Security as the "third rail" for political advantage, and Republicans for walking away from the table at the first mention of raising revenues. Neither side has been willing to put forward realistic, effective alternatives. Even if we are going to fix just Social Security, we need the kind of trust that existed between leaders like Ronald Reagan and Tip O'Neill when they reformed Social Security in 1983 and our tax code in 1986. And right now, we have a rare opportunity to build that trust. At the White House Fiscal Summit in February, we heard constructive comments on Social Security from leaders as diverse as John Boehner and Dick Durbin—and we saw that stakeholders from the AARP to the National Federation of Independent Businesses understand the need for compromise, as well. That is not to say that reforming Social Security should take priority over reforming healthcare—simply that we must, and should, deal with multiple challenges at once, and that the Republican interest in working constructively on Social Security gives us a real opening for progress, along with an immediate chance to take pressure off of the budget.

Hoyer also talked up the possibility of a reform commission:

The political challenges on Social Security, Medicare, and Medicaid are extraordinary. So I think it's very possible that finding a solution will demand an extraordinary process. Some Members of Congress, including Congressmen Cooper and Wolf, have called for a Fiscal Future Commission—composed of Members of Congress and the Administration, experts outside the government, and those who would be directly affected by entitlement reform—which would propose solutions and send them to Congress for a vote. I think they make a strong case. A Fiscal Future Commission would help protect that process from the political attacks that have derailed it in the past.

My thoughts: First, kudos to Rep. Hoyer for being willing to stick his neck out when so many would prefer he said nothing. Social Security is not as large a problem as Medicare, but it's huge compared to pretty much anything else. The idea that it's not worth addressing seems to me to be pretty silly and it's nice to see a leader who realizes that. Second, how should Republicans respond? There will be some temptation to do what Democrats did in 2005, which is simply to play politics and try to make some political hay out of the other party attempting to fix a tough problem. That would be a mistake. The system needs to be fixed as much today as it did in 2005, and while the policy outcome surely won't be as favorable to conservatives as it might have been in 2005, we have to accept that elections have repercussions. Moreover, Social Security politics won't get any easier for people on the right, as more and more Americans shift from the taxpayer class to the beneficiary class. This isn't to say that conservatives should roll over and play dead; they should stand up for limiting the size of the program, holding the line on taxes, and pushing individual control where possible. But they shouldn't insist on getting everything before coming to the table.

About me

I am a Resident Scholar at the American Enterprise Institute in Washington, where my work focuses on Social Security policy. Previously I held several positions within the Social Security Administration, including Deputy Commissioner for Policy and principal Deputy Commissioner. Prior to that I was a Social Security Analyst at the Cato Institute. In 2005 I worked on Social Security reform at the White House National Economic Council, and in 2001 I was on the staff of the President's Commission to Strengthen Social Security. My Bachelor's degree is from the Queen's University of Belfast, Northern Ireland. I have Master's degrees from Cambridge University and the University of London and a Ph.D. from the London School of Economics and Political Science. I can be contacted at andrew.biggs @ aei.org.